DISTRIBUTION MANAGEMENT
Marketing Channels
Need for Marketing Channels
 Marketing channels have marketing intermediaries
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such as retailers, wholesalers, agents , brokers,
travelling agents etc
For understanding the need for marketing channels,
we have to understand the functions of marketing
FUNCTIONS OF MARKETING CHANNELS
Helps in physical distribution: Transporting and storing
goods
Promotes Communication: Promotes company’s
products
Provides Information
Plays key role in title transformation
Supports relationship management
Decisions Involved In Setting Up A Channel
 The following factors need to be taken into
consideration on setting up a channel:
1. Understanding the customer profile
 Purchase habit differ from individual to individual
 Individual who face shortage of time, make
purchase through the net and those who have
abundant time would like to go through shopping
experience
 Some people like to have variety of goods while
others want unique or specialized products
 Hence marketers should understand who are his
customer and how they purchase and how often
they purchase etc.
Decisions involved in setting up a channel
2. Determining the objectives of channel development
a. Reach: Company will adopt intensive distribution
channel in this case
b. Profitability: Companies will restructure the channel to
reduce the cost and thereby maximize the profit
c. Differentiation: In this situation, the companies will go
for new format of channels
Eg. Internet selling
3. Identify type of channel members: This involves
selecting the appropriate channel members such as
merchants, agents, resellers etc
 Merchants buy the product, take title and resell the
merchandize
 Agents are employed to find the customers but not to
take title of the products
 Facilitators are appointed to aid the distribution but do
not negotiate or take the title of the product
Decisions involved in setting up a channel
4.Determining the intensity of distribution:
 Intensity of distribution means how many
middlemen will be used at the wholesale and retail
level in a particular territory
 If channels are more, it will increase the cost and
if channels are less, company may not be able to
reach the target customers
 Therefore company should adopt optimum
number of intermediaries
 On the basis of number of intermediaries,
company can adopt one of the following
strategies:
Decisions involved in setting up a channel
a. Intensive
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Distribution
A strategy in which
company stocks
goods in more
number of outlets
The intention is to
make the goods
available near the
customer
Decisions involved in setting up a channel
b. Selective Distribution
 A strategy in which
company stocks
goods in limited
number of retail
outlets
 E.g.. Television sets
Decisions involved in setting up a channel
c.Exclusive Distribution
 A limited number of
dealers will be given
exclusive right to
distribute its products
in their territories
Decisions involved in setting up a channel
5. Assigning the responsibilities to channel members
 Company should define the territory of channel
members, at which price the products should be sold,
what service should be performed etc
6.Selecting the criteria to evaluate channel members
 Channel can be evaluated on the basis of a method
called SCPCA
a. Sales (S): The ability of the channel member to
generate the sales for company
b. Cost (C): The cost incurred for developing the channel
c. Profitability (P): Various alternatives and its profitability
d. Control ( C): How much control each channel member
desires
e. Adaptability (A): The channel alternatives should be
flexible enough to meet the changing requirements
CHANNEL MANAGEMENT STRATEGIES
 Managing and motivating
channel member
 Now channel members are
treated as partners
 The members are
integrated with the
company to reduce cost,
increase the efficiency and
helps customer service
 Companies are adopting
Partner Relationship
Management (PRM)
software to add value to
their supply chain
INTRODUCTION TO LOGISTICS MANAGEMENT
INTRODUCTION TO LOGISTICS MANAGEMENT
 “The tasks involved in planning, implementing, and
controlling the physical flow of materials, final goods
and related information from points of origin to
points of consumption to meet customer
requirements at a profit”. (Philip Kotler)
 From the above definition, it is clear that logistics
management involves moving of the products and
materials from suppliers to the factor ( inbound
logistics) and moving the product from the factory to
resellers and to customers (outbound logistics)
 The above stream of study involving the suppliers
and reverse distribution (returning products to
factory) in the logistics management is considered
as SCM
INTRODUCTION TO LOGISTICS MANAGEMENT
 SCM is the process of flow of goods, information and
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fund from supplier’s supplier to consumer
(supplier’s supplier-supplier-factory-intermediariesconsumers) effectively and efficiently
Ref example Page No: 219
MAJOR LOGISTICS FUNCTIONS
Warehousing:
Warehousing is used not only for storing goods but
also as a hub where goods come to the facility and
cross docked
Many companies now use specialized players in
warehousing and hence warehousing itself grew like
separate industry
Eg. Barista and Safe Express
Major Logistics Functions
b. Inventory Management
c. Transportation
> air transportation
> Water
> Surface
> Pipelines
> Internet carriers
Introduction to Retailing
 Characteristics
1. Direct interaction with customers
2. Purchase in small quantity
3. Tool of marketing communication
FUNCTIONS
1. Sorting
2. Breaking bulk
3. Holding stock
4. Channels of communication
5. Transportation
Types of retailing
1. Store retailing
1. Specialty stores
2. Department stores
3. Supermarkets
4. Convenience stores
5. Discount stores
6. Off-price retailers
7. Super stores
2. Non store retailing
Wholesaling
 FUNCTIONS
1. Selling
2. Bulk breaking
3. Warehousing
4. Transportation
5. Credit and risk taking
6. Information
TYPES OF WHOLESALERS
1. Merchant wholesalers
2. Brokers and agents